Record profits for Bury flooring group James Halstead

James Halstead flooring

Bury flooring group, James Halstead, has delivered record profits for the year to June 30, 2022, and increased its sales by 9.6%, leading to analysts lifting their profit forecasts for the group for the current financial year.

The firm achieved turnover of £291.860m, up from £266.362m the previous year. Pre-tax profits of £52.063m were up from £51.268m. The final dividend of 5.5p per share remains the same as the previous year.

Cash of £52.1m compares with £83.3m in 2021, due, in part, to an increase in inventory driven by supply and inflationary pressures.

Chairman, Anthony Wild, said: “The optimism at the start of the year on the decline of COVID-19, related supply problems and greater availability of labour was offset by a myriad of shortages/cost increases following the invasion of the Ukraine.

“Transport, fuel and energy increases were immediately obvious and whilst a significant issue during the spring/summer period, we have been mindful that the autumn/winter period may bring deeper problems.

“The most obvious effect on our business has been our decision to increase stockholdings as we sought to mitigate the risks associated with the potential inability to manufacture. This, in our view, seemed judicious and hopefully is over-cautious. In the event that the crisis does not escalate, then it is likely we will temporarily suspend some production for a period to bring stock levels back to normal.”

He added: “Trading from the year-end to date has been positive. Post year end, prices have been increased and demand has remained strong.

“Sales volume is higher and we have continued to pass on cost increases. Costs, most particularly energy, have continued to rise. The fall in the value of sterling, most markedly against the US dollar, in recent days will no doubt have implications to certain input costs but equally, given our level of exports, will have some positives.”

Chief executive, Mark Halstead, said: “A solid performance for a year that started in a positive way, as the large challenges of the last two years looked set to dissipate, only to be faced by a set of new obstacles with both energy and materials costs escalating.

“Given the circumstances we can only be pleased with the results for the year. The hard work, dedication and experience of our subsidiary directors and management has been a key factor in this achievement.

“However, the challenges have not lessened.”

Adrian Kearsey, an analyst with brokers Panmure Gordon, said: “The quality of a business is demonstrated by its ability to navigate turbulent markets. In this regard, James Halstead continues to score well, validating our positive stance on the stock.

“Moreover, the high (and sustainable) RoIC and the scope to further expand international sales provide additional layers to the James Halstead story. Therefore, we reiterate or BUY recommendation and 320p target price.”

The broker has also raised its pre-tax profit forecasts for the group, from £51.1m to £52.2m, a two per cent upgrade, adding that it had not forecast the 2022 record profit level.